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Where Can You Sue Corporations? Personal Jurisdiction After SCOTUS 2017.

Posted by Ted A. Schmidt | Feb 22, 2018 | 0 Comments

Corporations

The trilogyDaimler AG v. Bauman, S. Ct. (2014); BNSF Railway Co. V. Tyrell, 137 S. Ct. 1549 (2017) & Bristol-Meyers Squib Co. v. Superior Court, 137 S. Ct. 1773 (2017)

Personal Jurisdiction over out of state corporation can be general or specific.

General—defendants' contacts with forum state are so constant as to render the defendant “at home” within that state.

Specific—defendant's contacts with the forum state are related to the underlying claim.

General Personal Jurisdiction

In Tyrell, railroad workers sued BNSF in Montana for injuries suffered outside of Montana. Despite having over 2,000 employees and 2,00 miles of track within Montana the US Supreme Court rules BNSF's contact with the state was not “so continuous and systematic” as to make BNSF “at home” in Montana. Importantly, Tyrell relied upon rules announced in Daimler which addressed standards for jurisdiction in a state court over a corporation foreign to the United States.

The 14th Amendment's Due Process Clause requires that General jurisdiction will almost always require the defendant be incorporated or have its principal place of business in the forum state.

Specific Personal Jurisdiction

A month after deciding Tyrell the Supremes decide Bristol-Meyers Squib, Co. [BMS]. Here a group of out of state residents sued the BMS in California alleging injuries caused by the anti-blood clot drug BMS manufactured called Plavix. BMS was neither incorporated nor principally doing business in California. The California Supreme Court nonetheless found specific jurisdiction to exist in the case based upon the fact BMS employed over 100 people in California, had sold 187 million Plavix pills in California and took in more than $900 million in revenue from those sales.

SCOTUS disagreed finding that in order for specific or “case linked” jurisdiction to exist, the suit must arise from the defendant's contacts with the forum state. While the Court considers in its personal jurisdiction analysis the interest of the forum state and the plaintiff's choice of forum, the primary concern in a personal jurisdiction analysis is the burden on the defendant. Extensive connections with the state that have nothing to do with the specific injuries and claims by the specific plaintiffs in the case are of irrelevant. Here there was no evidence that any of BMS' connections with California had anything to do with these nonresidents and their claims—Plavix was not prescribed, purchased or ingested in California and the alleged injuries were not suffered in California.

In a Nutshell . . . the highest court in the land says no more Mr. Nice Guy for plaintiffs wishing to sue out of state corporate defendants where it is convenient or where the law is favorable. Clearly a reaction to perceived undesirable forum shopping by plaintiffs, the emphasis is no longer on easy access to the courts by the injured but rather on what is most convenient to the defendant. In choosing where to sue a defendant or where you are obligated to defend a claim look for these three critical factors

  1. Where is the defendant incorporated?
  2. Where is the defendant principally doing business?
  3. Where did the conduct forming the basis of plaintiffs' claims occur?

If you have any one of these three, jurisdiction is likely solid. Missing all three? Better choose a forum that has at least one of the above.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".

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